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New Interpretation of Non-Assignment Clauses Relevant for Securitisation and Factoring

Supreme Court 21 March 2014, ECLI:NL:HR:2014:682 (Coface/Intergamma)

On 21 March 2014, the Supreme Court ruled that a breach of a non-assignment clause results in a breach of contract, but is unlikely to affect the valid transfer (and pledge) of the assigned rights.

The judgement is relevant to parties involved in various types of financing, such as securitisations, factoring and reverse factoring, in which the assignment of rights is an essential requirement. Rights governed by Dutch law subject to a non-assignment clause were traditionally considered unsuitable for these types of financing. This judgement challenges that traditional thinking. The judgement has the potential to significantly expand the number of claims that are suitable for securitisations, factoring and reverse factoring.

Since 2005, Intergamma had been purchasing electronics from the AFK group on Intergamma's general terms and conditions of purchase. The non-assignment clause in these terms and conditions prohibited the vendor (AFK Group) from transferring all or part of its rights and obligations to third parties without Intergamma's prior written consent. In violation of that prohibition, AFK Germany, the entity in the AFK group to which Intergamma made payments, assigned its claims against Intergamma to Coface in 2008 under a factoring agreement without seeking Intergamma's consent.

When Intergamma made payments early in 2009 to AFK Holland, another part of the AFK group, Coface invoked the assignment and asserted that the payments to AFK Holland did not release Intergamma from its payment obligations. Intergamma refused to pay Coface, and relied on the non-assignment clause which, according to Intergamma, meant that the assignment of AFK Germany's claims to Coface in 2008 was void.

Interpretation of the non-assignment clause: presumption that it only affects contracting parties

The key issue before the court was the effect of the non-assignment clause. Did it have the effect of invalidating the entire transfer of rights to Coface (ie did it have proprietary effect)? Or did it merely mean that AFK Germany was in breach of contract, but that the rights remained with Coface (ie that the clause had only contractual effect)?

The Supreme Court ruled that, in principle, there is a presumption that a non-assignment clause only takes effect under the law of obligations:

"A clause like the one at issue, which is also intended by its nature to affect the legal position of third parties that have no knowledge of the intention of the contracting parties, and which serves to uniformly govern their legal position, must be construed according to objective standards, with due observance of the Haviltex standard.1

The point of departure when interpreting clauses that exclude assignment of a claim must be that they only have effect under the law of obligations, unless their wording - construed according to objective standards – indicates that they were also intended to have effect under the law of property as referred to in Article 3:83, paragraph 2, of the Dutch Civil Code."

The case will now be referred back to the Hague Court of Appeal for it to decide whether the non-assignment clause in Intergamma's general terms and conditions was intended to have effect only under the law of obligations, or to have proprietry effect too.


A non-assignment clause which prohibits a party from assigning its rights (eg "the Seller shall not assign its rights") will, if breached, generally result in a breach of contract but will not affect the assignee's rights. The rights subjected to the clause are still transferred. Should a proprietary effect, ie actual non-transferability, be required, the non-assignment clause will need to explicitly state this (eg "The rights under this agreement are non-transferable").

The Supreme Court's ruling places increased emphasis on the precise wording of a non-assignment clause. Obligors who want a non-assignment clause to have absolute effect vis-à-vis third parties and contracting parties should review their contracts or general terms and conditions and make changes if necessary. The text must either explicitly state that an assignment prohibition has effect under the law of property. A clause must state that the claim itself cannot be transferred.

The ruling also affects finance parties. Before this judgment, it was generally assumed that every non-assignment clause took effect under the law of property unless the text of the clause contained indications that the prohibition only had consequences under the law of obligations. This judgment suggests the opposite, thus potentially widening the pool of rights suitable for securitisations, factoring etc.


Under Dutch law, if there is a dispute about the meaning of a contract provision, a Dutch court will ascertain this meaning by applying the following standard: what could the parties reasonably have understood that provision to mean and what could they reasonably have expected from each other? For this "Haviltex standard", all facts and circumstances are relevant, including the conduct of the parties before and after entering into the contract. For more information, please see our article "Plain Meaning of the Words Not Always Determinative for Commercial Contracts" in the EFLR of June 2013.

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